When starting a new self-employment venture, most use their own money from their personal savings or checking account to cover the start-up costs. However, doing this and remaining financially stable is not in the cards for some. These individuals have to find additional (in some cases all) financing from an outside source. There are many options out there – some difficult to access as a start-up – but a few of the financing choices for a self-employment venture include:
- Family and Friends | There’s nothing wrong with keeping it in the family! Family and friends are a common source of funding for new business ventures.
- Credit Cards | Though expensive, most newly self-employed business owners turn to credit cards and cash advances to finance their business. Even in the present market, there are many credit card offers, and some with significant credit limits.
- Crowd Funding | More likely than not you’ve seen the Kickstarter and GoFundMe campaigns on your Facebook and Twitter feeds. There are different rules based on what site you use, but essentially strangers give you money to support your campaign! If you choose this method, stay alert for any new regulations that may affect these venues.
- Grants | Have a great, innovative business idea? Your business may qualify for a grant from competitive federal funding programs such as the Small Business Innovative Research program.
- Invoice Factoring | When you’re just starting up, receiving a quick return on cash flow is important. Invoice factoring grants you quick access to working capital tied up in accounts receivable and reduces the risk of non-payment.
- Loans | A tried and true method, small and self-employed business owners have been turning to small business loans from financial institutions for years. Though securing large loans can be a challenge, smaller loans may be more attainable. If you visit the SBA website you can find loan programs specifically designed for small and self-employed businesses.
- Business Accelerators & Incubators | Though they don’t necessarily provide financing, business accelerators relieve some of the financial stress of starting up. By giving you access to office space, equipment, education, networking and more, accelerators introduce you to a low cost environment where your business can grow and prosper.
- Trade Credit | Your suppliers can actually be a great source of financing for a new business. If the business owner is trustworthy, some suppliers are willing to sell their products on credit, typically for 30 or even 60 days. This helps relieve some of the cash flow stress on starting up.
Financing your self-employment venture doesn’t have to be difficult. You just have to find the right methods and arm yourself with knowledge and facts. Do this and you will have a much easier time accessing the capital you need to get started and succeed.